PROBLEM 9-18 Activity and Spending Variances L09-1, L09-2, L09-3 You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Actual Cost Cost Formula in March Utilities $20,600+ $0.10 per machine-hour $24,200 Maintenance $40,000+ $1.60 per machine hour $78,100 Supplies.... $0.30 per machine-hour $8,400 Indirect labor $130,000+ $0.70 per machine-hour $149,000 Depreciation $70,000 $71,500 During March, the company worked 26.000 machine-hours and produced 15.000 units. The company had originally planned to work 30.000 machine-bours during March Required: 1. Calculate the activity variances Mr March. (Hint: Refer to Exhibit 9-6.) Explain what these variances mean. 2. Calculate the spending variances for March. (Hint: Refer to Exhibit 9-7.) Explain what these variances mean, DDADIERA